Rating Rationale
May 25, 2023 | Mumbai
Juniper Green Sigma Private Limited
Rating Reaffirmed
 
Rating Action
Total Bank Loan Facilities RatedRs.380.5 Crore
Long Term RatingCRISIL AA-/Stable (Reaffirmed)
Note: None of the Directors on CRISIL Ratings Limited’s Board are members of rating committee and thus do not participate in discussion or assignment of any ratings. The Board of Directors also does not discuss any ratings at its meetings.
1 crore = 10 million
Refer to Annexure for Details of Instruments & Bank Facilities

Detailed Rationale

CRISIL Ratings has reaffirmed ‘CRISIL AA-/Stable’ rating on the long-term bank facilities of Juniper Green Sigma Private Limited (JGSPL).

 

The rating factors in the low offtake and counterparty risk as the entire capacity is tied up with a strong counterparty, Gujarat Urja Vikas Nigam Limited (GUVNL). The rating also reflects a healthy financial risk profile, driven by a moderate debt service coverage ratio (DSCR) and healthy liquidity These strengths are partially offset by susceptibility technological risk associated with solar plants, and dependence on favourable solar irradiation for power generation and limited track record of operations.

Analytical Approach

For arriving at the rating, CRISIL Ratings has taken a standalone view on JGSPL.

Key Rating Drivers & Detailed Description

Strengths:

Healthy revenue visibility through power purchase agreement (PPA)

The 25-year power purchase agreement (PPA) signed with GUVNL minimizes the offtake risk. The entire 120 MW capacity became operational in December 2020. The PPA has a fixed tariff of Rs 2.67 per kilowatt hour (kWh) throughout its tenor. Further, GUVNL has a healthy track record of timely payments (generally received within 10 days), resulting in low, albeit concentrated counterparty risk.

 

Healthy debt servicing metrics

JGSPL had debt of ~Rs 366 crore (principal) as on March 31, 2023, with healthy debt servicing cushion over its tenure at P90 PLF projection. Any material increases in leverage leading to reduction in the expected DSCR over the debt tenure will be a rating sensitivity factor. The company also maintains a debt service reserve account (DSRA) in the form of fixed deposits of ~Rs. 12 crores to cushion any delay in payment from counterparty or variation in the PLF.

 

Weaknesses:

Technological risks associated with solar power plants and dependence on favourable solar irradiation for power generation

Solar power generation depends on irradiation levels around the plant's location. Also, changes in the average temperature or performance of solar modules may affect the company's power generation and lead to higher-than-expected degradation in solar panels. Given that cash flow of a solar power project is highly sensitive to variation in PLF, these factors could impair the debt servicing capability of solar projects.

 

Limited operational track record vis-a-vis P50 estimates

The 175-megawatt peak (MWp; direct current [DC] capacity) power project was commissioned in December 2020 ahead of its scheduled commissioning. The project has been operational for two and half years now. The operational performance for fiscal 2023 was better than P75 but lower than when compared to P50 levels.

Liquidity: Strong

Liquidity is expected to be adequate, with cash flow projected around Rs. 66 crores and Rs. 65 crores in fiscal 2024 and 2025 (at P90 PLF) against yearly debt obligation of Rs 45 crore each in fiscal 2024 and. JGSPL has DSRA covering more than three months of debt servicing in the form of fixed deposits. Additionally, cash and cash equivalents of Rs. 71 crore as on May 13, 2023.

Outlook: Stable

JGSPL is expected to benefit from a long-term PPA with GUVNL and short receivable cycle

Rating Sensitivity Factors

Upward factors

  • Faster than expected deleveraging leading to improvement in average DSCR above 1.45x levels (in CRISIL sensitised projections) over remaining debt tenor
  • Sustenance in superior generation, typically better than P50 or P75 levels.

 

Downward factors

  • Weaker performance than P90 levels
  • Deterioration in credit quality due to increase in receivable cycle and/ or higher than budgeted O&M expense

 

Key terms of bank loan

Key Term

Description

Restricted payment conditions

Dividends on equity share capital or interest on any unsecured loan/ quasi-equity from the promoter to be paid only on satisfaction of below conditions:

  1. All the requirements for reserves mentioned under Trust and Retention Account (TRA), including but not limited to DSRA and MMRA.
  2. All repayment obligations which are due have been paid.
  3. No event of default has occurred or subsisting.
  4. Borrower has delivered financial statements and certificates and there in no material adverse effect.
  5. Financial covenants stipulated are complied with.
  6. Written consent of lender has been obtained.

Restricted payment shall be permitted on an annual basis at the end of the previous fiscal year out of the surplus cash balance, subject to compliance with the restricted payment conditions mentioned above and the provisions of TRA.

Operating Account Waterfall

The operating period account shall be opened and maintained in the name of the borrower, which shall have the following sub-accounts-

  1. Statuary dues
  2. O&M expenses
  3. Debt service payments
  4. Debt service reserve
  5. Major maintenance reserve
  6. Surplus
  7. Distribution

About the Company

JGSPL operates a total of 120 MW(AC) capacity at 3 different locations in Khadol (45 MW), Babsar (35 MW) and Bhordu (40 MW) of Gujarat. The entire capacity of the project became operational between October 2020 and December 2020. The company has a PPA with GUVNL at a tariff of Rs 2.67/Kwh for 25 years.

Key Financial Indicators*

As on/for the period ended March 31

2022

2021

Revenue

Rs.Crore

87

27

Profit After Tax (PAT)

Rs.Crore

6

NM

PAT Margin

%

6.4

NM

Adjusted Debt/Adjusted Networth

Times

5.13

5.64

Interest Coverage

Times

1.58

1.57

*Project became operational in Dec 2020, figures only depict three months of operations.

Any other information: Not applicable

Note on complexity levels of the rated instrument:
CRISIL Ratings` complexity levels are assigned to various types of financial instruments and are included (where applicable) in the 'Annexure - Details of Instrument' in this Rating Rationale.

CRISIL Ratings will disclose complexity level for all securities - including those that are yet to be placed - based on available information. The complexity level for instruments may be updated, where required, in the rating rationale published subsequent to the issuance of the instrument when details on such features are available.

For more details on the CRISIL Ratings` complexity levels please visit www.crisilratings.com. Users may also call the Customer Service Helpdesk with queries on specific instruments.

Annexure - Details of Instrument(s)

ISIN Name of instrument Date of
allotment		 Coupon
rate (%)		 Maturity
date		 Issue size
(Rs.Crore)		 Complexity 
levels		 Rating assigned
with outlook
NA Term Loan NA NA Dec-38 380.5 NA CRISIL AA-/Stable
Annexure - Rating History for last 3 Years
  Current 2023 (History) 2022  2021  2020  Start of 2020
Instrument Type Outstanding Amount Rating Date Rating Date Rating Date Rating Date Rating Rating
Fund Based Facilities LT 380.5 CRISIL AA-/Stable   -- 02-06-22 CRISIL AA-/Stable   --   -- --
All amounts are in Rs.Cr.
Annexure - Details of Bank Lenders & Facilities
Facility Amount (Rs.Crore) Name of Lender Rating
Term Loan 380.5 Power Finance Corporation Limited CRISIL AA-/Stable

This Annexure has been updated on 25-May-2023 in line with the lender-wise facility details as on 02-Jun-2022 received from the rated entity.

Criteria Details
Links to related criteria
CRISILs Approach to Financial Ratios
The Rating Process
CRISILs Bank Loan Ratings - process, scale and default recognition
Criteria for rating solar power projects
Understanding CRISILs Ratings and Rating Scales

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